- There were 3.7 months of for-sale supply on the market in January, the most in six years.
- An increase in supply and drop in homebuying demand has tilted the national market in favor of buyers, with listings starting to pile up in many areas across the country.
- Florida metros top the list of buyer’s markets, led by Cape Coral and Miami.
- Two upstate New York metros—Rochester and Buffalo—top the list of markets which still favor sellers.
The U.S. housing market has tilted in favor of buyers for the first time this decade, with 3.7 months of for-sale supply sitting on the market in January. That’s the most since February 2019 and up from 3.3 months a year ago.
It’s worth noting that the picture looks different across different areas of the country, with buyers favored across Sun Belt metros, while sellers generally have more power in the Northeast and Midwest.
This is according to a Redfin analysis of MLS data in January. The months of supply metric tells you how many months it would take for all the homes on the market to sell, given the current monthly sales pace. A lower number typically favors sellers, while a higher number typically favors buyers. (Note: This data is not seasonally adjusted and January typically has the most months of supply because it’s in the middle of the slow season for sales.)
Historically, four to six months of supply has indicated a buyer’s market, and January was the closest the U.S. housing market has come to four months of supply since 2019.
There are a range of other data points signaling favorability for buyers ahead of the spring homebuying season:
- Sales are slow: Pending sales fell 6.3% in January to the lowest mark since the early days of the pandemic in April 2020.
- Listings are sitting longer: The typical home sold in January had been on the market for nearly two months (56 days), the longest period since February 2020.
- Price growth is slowing: The median U.S. home price was up 4.1% year over year in January, the slowest growth since September and more in line with the rate experienced in the late 2010s.
- More negotiation is possible: The typical home sold for 1.8% less than its final asking price in January, the biggest discount in nearly two years.
- Deals are falling through: Home purchases were canceled at the highest January rate since at least 2017 last month.
“Historically, a buyer’s market has been defined as when months of supply reaches 4-6 months—but old definitions don’t fit the reality of today’s market,” said Redfin Economics Research Lead Chen Zhao. “Many buyers don’t feel like they are in a buyer’s market, with home prices at near-record highs and mortgage rates elevated. But we are more than halfway through the decade and this is the first time we can say that buyers have as much, if not more, power than sellers.”
Zhao cautioned that even though the pendulum may have swung in favor of buyers, these conditions may not last long. More buyers may start to move off the sidelines when they realize there’s more inventory available.
Sun Belt metros dominate list of buyer’s markets, while sellers are still favored in the Northeast
There is more inventory for buyers to choose from—and therefore more room for negotiation—across the Sun Belt states. This is particularly the case in Florida, which has six of the top 10 major metros with the most months of supply.
Cape Coral, FL tops the list, with 11.6 months of supply in January, up from 8.6 months a year ago. Next comes Miami (11.4 months of supply, +3 months year over year), McAllen, TX (10.5 months, +2.5 months YoY), Fort Lauderdale, FL (10.3 months, +2.9 months YoY) and West Palm Beach, FL (9.6 months, +1.8 months YoY).
Florida tops the list of buyer’s markets because the pandemic-driven construction boom has increased housing supply as buyer demand dries up due to the relative lack of affordability. Demand has also dropped because of the increased risk of natural disasters and subsequent higher insurance costs.
“It’s 100% a buyer’s market right now,” said Bryan Carnaggio, a Redfin Premier agent in Jacksonville, FL. “There’s a ton of inventory. Everywhere you go, there’s a house for sale. Most sellers here know the market is bad and it’s not advantageous to sell right now, but either they’re tired of waiting for things to improve, or they really have to sell because they are moving out of state. For buyers, this means there are more opportunities to negotiate on price and terms.”
